DUBS cautions against expanded SST on financial services

KUCHING: The Sarawak Bumiputera Entrepreneurs Chamber (DUBS) has voiced concerns over the government’s proposal to expand the Sales and Services Tax (SST) to include fee-based financial services, cautioning that the move could place a strain on businesses, particularly small and medium enterprises (SMEs).

Its president Datuk Abang Helmi Ikhwan noted that while the expanded tax could increase operational costs for SMEs, potentially leading to higher consumer prices or reduced profit margins, it could also offer long-term benefits if the additional revenue is reinvested into support programmes for these businesses.

Thus, he suggested that if funds are directed towards initiatives such as financing, training, and infrastructure development, SMEs could ultimately gain from the change.

“It is crucial that the government engages with SMEs during this transition to ensure their concerns are addressed and that they receive the necessary support.,” he said when contacted by Sarawak Tribune.

With the progressive SST changes set to take effect on May 1, 2025, he expected that the business community to have concerns about whether the timeline allows sufficient time for companies to adjust their operations, accounting, and compliance strategies.

“In addition to this, there may be apprehension about the clarity of the regulations and guidelines that will govern the new tax regime.

“Businesses will require sufficient lead time to adjust their operations and financial planning accordingly, so any delays or lack of clarity could lead to confusion and compliance issues,” he said.

Touching on the exclusion of essential food items from the sales tax, Abang Helmi sees it as a positive step to alleviate the cost of living, however, it may not be sufficient on its own to prevent a significant increase in living costs.

He stressed that other factors, such as inflation and supply chain disruptions, could still drive up living costs.

“It will be important for the government to monitor these factors closely and consider additional measures to support the public, especially vulnerable groups, to ensure that they are not disproportionately affected by rising costs.

“Overall, the government’s approach to expanding the SST should be carefully managed, with ongoing dialogue between stakeholders and a focus on mitigating any adverse impacts on businesses and the general public,” he said.